New Delhi: State-owned Hindustan Petroleum Corp Ltd (HPCL) on Tuesday reported a steep drop in net profit for the quarter ended 31 December, as refining margins shrunk and government did not compensate it fully for fuel losses.

“The profit for the quarter ended 31 December 2011 was higher as approval for compensation for under-recoveries (revenue losses) on sale of sensitive petroleum products of earlier quarters was accounted for during October-December 2011,” he said.

During the first nine months of the 2012-13 fiscal, the company lost Rs27,706 crore on sale of diesel, domestic LPG and kerosene at government-controlled rates. Of this, Rs10,041 crore was made good by upstream firms like ONGC, and another Rs12,205 crore came as cash subsidy from the government.

“There is Rs5,460 crore unmet under-recoveries,” he said adding that the company had debts close to Rs36,000 crore.

Fuel retailers are currently losing Rs9.22 per litre on diesel, Rs31.60 a litre on kerosene and Rs481.03 per 14.2-kg domestic LPG cylinder.

HPCL, which has been borrowing $400-500 million every year in overseas loans, is looking at raising an equivalent amount in external commercial borrowings (ECBs) before March end.

“We have approval from the RBI to raise $750 million in foreign debt. The remaining (after raising $400-500 million of ECB) will be raised through bonds this fiscal or the next,” Rao said, adding that the company is in the process of appointing agency to do credit evaluation of the firm.

The company earned $1.92 on turning every barrel of crude oil into petroleum products during the quarter as compared to a gross refining margin of $4.09 per barrel in a year ago period, he said.

Crude throughput increased to 4.22 million tons from 4.08 million tons in Q3 last fiscal while sales was up over 2% to 7.31 million tons.

Due to government’s failure to compensate it fully for the fuel losses, HPCL had accumulated loss of Rs6,774.60 crore in the April-December period.